A company is considering an investment (at time = 0) in a machine that produces

Question

A company is considering an investment (at time = 0) in a machine that produces large plastic boxes. The cost of the machine is 47674 dollars with zero expected salvage value. Annual production in units during the 3-year life of the machine is expected to be (starting at time = 1) 4618, 8516, and 11950. The sale price per unit of the plastic boxes is 10 dollars in year one, and then expected to increase by 9% per year. Production costs per unit will be 6 dollars in year one, and then expected to increase by 5% per year. Depreciation on the machine is 11777 dollars per year, the tax rate is 40% and the minimum acceptable rate of return is 6% percent. Calculate the net present value of this investment. Assume all flows are at the end of each year. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas) Answer= 27994.18

Explanation / Answer

A company is considering an investment (at time = 0) in a machine that produces

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